Barnes & Noble: Glass Lewis, Egan-Jones Endorse Riggio and Poison Pill

by Geoff Gannon

Proxy advisors Glass Lewis and Egan-Jones endorsed the Riggio party and its poison pill in the Barnes & Noble (BKS) board election.

Of modern Wall Street’s sins, the one Benjamin Graham would never forgive is listening to a proxy advisor.

“Glass Lewis’s analysis concludes that Mr. Burkle and his nominees have not offered a compelling plan or strategy to build value at Barnes & Noble and that his proposed amendment to the company’s shareholder rights plan could enable Burkle to team with Aletheia to acquire control of the company without providing shareholders a control premium.”

Glass Lewis is wrong on the people and the pill.

Without the pill: neither Burkle nor Riggio could take control without paying a premium, because each party blocks the other and too much stock is sold short. The poison pill doesn’t block a creeping takeover. It blocks a Northern Pacific mad dash to 50%.

Ron Burkle is one of America’s best investors. In You Can Be a Stock Market Genius, Joel Greenblatt calls Stephen Bollenbach a “financial whiz” and a big reason why he bought stock in Host Marriott. None of the Riggio party other than Len is impressive. If the proxy advisors endorsed on merit alone it would be: Burkle, Bollenbach, and Riggio.

Instead they break with common sense and endorse a barely independent board (Judge Strine’s words), an ineffective compensation committee (Glass Lewis’s words), and a poison pill at a company with a staggered board.  

The Barnes & Noble polls close September 28th.